Cheez-It, Pringles Parent Chooses Chicago For HQ, But It’s Crumbs For CRE
News that Chicago is landing Kellogg Co.'s new HQ after the company split itself three ways earlier this week is a morale-booster just weeks after a pair of high-profile corporate departures.
But it probably won't mean any significant real estate shake-ups in the near-term.
Kellogg Co., the maker of mainstay brands like Frosted Flakes and Eggo, announced Tuesday it would separate into three independent companies, spinning off its cereal and plant-based businesses and headquartering its $11.4B snacks operation in Chicago.
The company said snacks represented about 80% of its net sales in 2021, and it painted the move as the next step in the company's quest to improve performance in all three categories while increasing shareholder value.
"Today's announcement is the next step in that transformation," Kellogg Chairman and CEO Steve Cahillane said in a release. "These businesses all have significant standalone potential, and an enhanced focus will enable them to better direct their resources toward their distinct strategic priorities. In turn, each business is expected to create more value for all stakeholders, and each is well positioned to build a new era of innovation and growth."
The yet-to-be-named snacks company, which is temporarily going by "Global Snacking Co.," will be based at 412 North Wells St., where the company already leases space. Kellogg currently counts about 300 employees between locations in Chicago and Naperville.
The move is a salve to Chicagoans still smarting from two high-profile headquarters losses. Aerospace giant Boeing announced it would move its operations from Chicago to Arlington, Virginia, in May, and construction and mining manufacturer Caterpillar Inc. announced just over a week ago it planned to decamp to a Dallas-Fort Worth suburb.
City officials touted the possibility of new high-paying jobs.
“They’re moving the highest-growth division to Chicago. The key word there is growth,” Deputy Mayor for Economic Development Samir Mayekar told Crain's Chicago. “That growth will happen here in Chicago."
What is unlikely to grow, at least anytime soon, are Kellogg's commercial real estate holdings.
A company spokesperson told the Chicago Sun-Times no workers will be asked to relocate, adding “the transactions will not result in any office moves or closures, and the company’s intent is for its current real estate footprint to remain the same.”
The other two spun-off companies, going by North America Cereal Co. and Plant Co. for now, will remain headquartered in Kellogg's longtime home of Battle Creek, Michigan. The snacks company will also continue to maintain corporate campuses in both Chicago and Battle Creek, it said in the release.
In a call with investors yesterday afternoon, however, Cahillane underlined the growth potential, including new facilities, offered by the three-way split, which is expected to be completed in 2023.
“This may include investing more in brand building to build consumer awareness and increase household penetration,” he said. “It may include investing more in emerging food technologies, new supply chain capabilities, extended distribution across channels and expansion into international markets.”